) to buy from hold.
Analyst Kimberly Alexy believes valuation is sufficiently attractive and the risk/reward is compelling. She notes while she does not see any near-term catalysts, she acknowledges consumer demand trends are softening (following a strong fourth quarter, in which Gateway did not participate), the company's strategy to go for share is the right one (although she thinks its cost structure remains too high). Still, Alexy believes Gateway can sustain its aggressive pricing stance for at least the next several quarters without materially impacting cash balances -- a key aspect to Gateway's valuation call. Alexy sees a $0.45 2002 loss, and $0.13 2003 earnings per share. She has a $7 target.